Islamic finance bodies to assess coronavirus damage on industry

JEDDAH As the coronavirus keeps spreading globally and leaves a swath of economic disruption on its way, several Islamic finance umbrella organisations have started assessing the potential damage the virus has on Islamic finance and banking and the halal industry as a whole. The Islamic Development Bank, a multilateral development finance institution focusing on supporting the Islamic finance industry in its 57 member states, in a statement said it was “deeply concerned about the loss of lives, the socio-economic disruptions and the strain on countries’ health systems caused by this emerging pandemic.” The bank expressed solidarity with its member countries and emphasised it stood ready “to extend all possible support to address the threat caused by the Covid-19 virus” and would lend support to its members “in the short, medium and long-term.” Iran, hit hardest by the disease in the Middle East, was among the first to send a request to the Islamic Development Bank – among other international development organisations – for financial and non-financial assistance to control, combat and treat the coronavirus and tackle the economic impact of the pandemic on the country. Iran’s ministry of economy on its website said it expects “urgent responses” to its requests. In another statement last week, Kuala Lumpur-based Islamic Financial Services Board, a globally active body that sets standards and offers guidance for Islamic banking and finance with 180 members, including regulatory and supervisory agencies, industry associations and financial institutions, said it was “closely monitoring the current regional and global situation” and was implementing measures to ensure the health and safety of all member representatives and staff. The measures include the postponement of all physical workshops and meetings and the introduction of virtual formats instead, the activation of a dedicated information and support telephone hotline for all members, delegates and the public, as well as “initiatives to assess and review the financial stability implications of Covid-19 on the global Islamic financial services industry, particularly on our members’ jurisdictions.” The member banks of the Association of Islamic Banking and Financial Institutions Malaysia, one of the largest national umbrella groups for Islamic banks in the industry, encouraged their customers, both individuals and businesses, to connect with their respective banks “to seek advice regarding their banking issues that have arisen as a result of the outbreak.” As a first proactive measure, a number of Malaysian Islamic banks, including Maybank Islamic, RHB Islamic Bank and Hong Leong Islamic Bank, have begun to offer relief packages for their clients, namely temporary deferment of loan repayments, restructuring and rescheduling of financing lines and other options on a caseby-case basis to help overcome immediate financial constraints faced by customers owing to the virus outbreak. “We do understand that this sudden turn of events arising from the virus outbreak have impacted some of our customers across various industries, and also individually,” Maybank president and CEO Abdul Farid Alias said in a statement, adding that “as their financial partner, we would like to do our part and help relieve them from added distress during this difficult period. In addition to assistance and help from banks, a number of Islamic insurance operators in Malaysia – alongside conventional insurers – have pledged to provide hospitalization coverage and treatment to their policy holders during the coronavirus outbreak even though diseases with legal quarantine are technically excluded from coverage. According to the Malaysian Takaful Association, its 15 members, among them large Islamic insurers such as AIATakaful, Hong Leong Takaful, Sun Life Takaful, Prudential Takaful, Maybank’s takaful division Etiqa and Zurich Takaful Malaysia, will waive this exclusion for certificate holders of life, health and family takaful. “We call for strong global co-ordination and collaboration for immediate response and medium- to long-term interventions,” IsDB president Bandar M H Hajjar said, adding that “we will work hand in hand with all partners for a united action to overcome this pandemic.” The IsDB will also co-operate with development partners such as Arab Co-ordination Group, an organisation which comprises bilateral and multilateral Arab development institutions, the Opec Fund for International Development and theAsia Infrastructure Investment Bank to mobilise resources to support member countries, Hajjar noted.—(Courtesy: Gulf Times)